Packaging and Industrial Films CCA

 

About the CCA 

A Climate Change Agreement (CCA) is a voluntary agreement containing targets to increase energy effiency and reduce carbon dioxide emissions. They form part of a package of UK government measures to respond to the challenges of climate change while helping the industry remain internationally competetive. Operators who commit to the scheme are entitled to a discount on the Climate Change Levy (CCL) charge seen on their energy invoices; from April 2023 a discount of up to 92% is available on the electricity CCL charge and up to 89% relief on natural gas and other fuels.

The set-up and maintenance of a CCA involves a number of governing bodies.

Eligibility

The eligibility criteria for the Packaging and Industrial Films (PIFA) Climate Change Agreement is:

An installation or site where plastic film is produced using extrusion to convert melted polymer into blown or cast film: all processes and activities involved in the production of plastic film using extrusion to convert melted polymer into blown or cast film, and which may include printing using organic solvents in the following processes; lithography, letterpress, flexography, gravure and screen printing on plastic film.

Assessing the CCA Eligible Energy

The energy consuming areas on the site should be identified under three categories:

1.    Stationary technical unit (STU) – The eligible process(s)
2.    Directly associated activities (DAAs) – Energy consumed by activities supporting the eligible process (compressors/ chillers / vacuum feeds /lighting etc.)
3.    Other activities – energy consumed in all areas not technically linked or supporting the eligible process, also known as non-eligible (offices, kitchen, store room etc.)

The 70% rule 

The basic principles of the rule is as follows:

If the installation (STU and DAA) consumes 70% or more of the site’s total energy, the site as a whole is deemed to be fully eligible.
If the installation consumes less than 70% of the site’s total energy the site is allowed to claim an additional 3/7th of the installations eligible energy consumption as eligible. However the defined installation and any 3/7th addition must be sub-metered.

Base year and targets

The base year should be 12 months of consecutive energy consumption and throughput data. Historically the base year has been set at 2008 however with the CCA extension announced in the Spring 2020 Budget the base year has been adjusted to 2018. Where 2018 is not available (e.g. because the facility opened after this date) then the closest 12 months of continuous data to this may be used.

All participants of the CCA scheme have an efficiency improvement target set against the baseline; for the Packaging and Film CCA it is possible to report against a standard relative energy target or a novem energy target

A Relative target considers all the energy consumed and production throughput for the site as a whole (for example there is one overall measure of kWh/tonne)

A Novem target is used when the site produces two or more products or product groups which have very different energy intensities or where the current operation and or product mix has changed since the base year (in this case each product or product group has a defined kWh/tonne)

Operators who commit to a CCA are required to work towards energy efficiency improvement targets. The Packaging and Film CCA  improvement target under Phase II of the scheme is 5.9% against a base line of 2008. The sector commitments were agreed between DECC and the sector associations in 2012 and form the overall energy efficiency improvement until 2020.

In the Spring 2020 budget a two year extension was announced for the CCA scheme resulting in a further target period for 2021-2022 with CCL relief entitlement set to continue until March 2025. The energy efficiency improvement target for Target Period 5 (2021-2022) is 4.068% set against a new 2018 base year.  

Under Phase II  of the scheme there were initially four target periods, each 24 months starting on 1st January.The first target period under Phase II of the scheme was 1 January 2013 to 31 December 2014. The Government have since confirmed two extensions to the scheme, Target Period 5 (January 2021 to 31 December 2022) and Target Period 6, a 12 month target period (January to December 2024). Both target period 5 and 6 have a baseline year of 2018. The latest extension to the scheme allows for CCL relief for eligible facilities until 31 March 2027. 

TP1 (2013-2014)	TP2 (2015-2016)	TP3 (2017-2018)	TP4 (2019-2020)	TP5 (2021-2022)	TP6 (2024)
2.9%	3.933%	4.917%	5.9%	4.068% (BY 2018)	4.068% (BY 2018)

          
Where the target is not met, an operator can remain a participant in the scheme, through a CO₂e Buy-out mechanism to account for the difference between actual and target performance. This was set at £12/tonne for Target Period 1 and 2, rising to £14/tonne for Target Period 3 and 4. Under Target Period 5 (2021-2020) the buy-out was £18/tonne and for Target Period 6 (2024) this is increasing to £25/tonne.  

Targets applied to individual target units may vary from the sector commitment. New scheme entrants with a 2008 baseline are expected to adopt the target profile of the sector however this may vary following the application of the target stringency test. This test is where an adjustment is made if the recent performance indicates that the improvement target has already been achieved. This is in line with BEIS' policy objective for the CCA scheme which states that the scheme offers a reduction in the Climate Change Levy (CCL) in exchange for challenging energy efficiency improvement targets

How to apply 

We have an experienced team in place to assist you in the application process and provide guidance on all aspects of your CCA.

*The CCA scheme closed to new applications on 30 September 2023. Please contact the CCA team for details on the next application window. 

If you are interested in joining the CCA scheme please register your interest by emailing [email protected] with a brief description of the process(es) at site and an indication of your annual energy consumption.
 
We will provide information on the potential benefit of the scheme to you along with an application pack.

CCA Application

The key documents required to support an application: 

Manufacturing process description	A description of the manufacturing process conducted at the site, from receipt of raw material to dispatch of the final product. The narrative should also describe the product or range of products being produced.
Process flow diagram	An illustration of the flow of activities around the site. The eligible processes and DAAs should be clearly marked.
Annotated site plan	An illustration showing the extent of the eligible facility. This should cover the whole site, with the site boundary, the Eligible, DAA and ineligible areas clearly marked.
Eligible process description	For the purpose of the CCA scheme the eligible process refers to an installation or site where plastic film is produced using extrusion to convert melted polymer into blown or cast film: all processes and activities involves in the production of plastic film using extrusion to convert melted polymer into blown or cast film, and which may include printing using organic solvents in the following processes; lithography, flexography, gravure and screen printing on plastic film
EPR Permit	If the site already falls under the environment permitting regulations and has a permit to operate under these regulations you must provide a copy of the permit.
Details of the directly associated activities (DAA) to the eligible process	A list of the auxiliary equipment that is not part of the eligible process but necessary for it to run (e.g. Compressors/ Chillers/ Control room).
Eligibility assessment	A calculation provided in a spreadsheet format to show the proportion of energy consumed within the Eligible and DAA processes. The assessment should be based on a recent 12 month period, ideally within 6 months of application. Assessment of the 70% rule also known as the 70/30.
Base Year	The base year requires 12 months of consecutive energy and throughput data. The base year for Target Periods 1-4 is 2008, this has been adjusted to 2018 for Target Period 5 & 6.

 
    

Application approval stage

The CCA application should be submitted to [email protected] for QA. We then make the formal submission to the Environment Agency via an online registry. At the point of application approval by the EA a Proposed Underlying Agreement for the scheme is issued. The operator is required to give assent to this document, following this the agreement is activated and the site formally enters into a CCA.

Apply for your CCL exemption
The site is eligible to claim Climate Change Levy relief from the point of CCA activation. To claim the relief you must complete and submit the HM Revenue & Customs PP10 and PP11 forms. The PP10 should be submitted to HMRC and the PP11 to your energy supplier. Separate forms are required for each energy supply. 

Find the PP10 form here

Find the PP11 form here
 

CCA Fees
 

At the point of CCA activation the BPF will send you a CCA Partner Application Form that will include the Joining and Annual Fees.
The CCA fees are based on the base year primary (delivered electricity to site muliplied by 2.6 plus other fuels) energy at the site. 

-    Small sites            up to 5,000 MWh per year 
-    Medium sites        between 5,001 – 15,000 MWh per year
-    Large sites            between 15,001 – 50,000 MWh per year
-    Very large sites     over 50,001 MWh

 

Joining Fee	BPF members    (£ per site)	Non-members (£ per site)
Band A (small site)	550	950
Band B (Medium site)	700	1550
Band C (Large site)	1450	2900
Band D (Very large site)	2025	3800

                   
     
 

Annual Fee	BPF members    (£ per site)	Non-members (£ per site)
Band A (small site)	550	950
Band B (Medium site)	700	1550
Band C (Large site)	1450	2900
Band D (Very large site)	2025	3800

      

Information about reporting

If you are a participant your obligations are:

•    To maintain an evidence pack. Inclusive of the application documents, Underlying Agreement (UnA), yearly eligibility reassessments/Energy reduction survey and evidence of energy reduction measures implemented as a result of the survey or independently implemented, a copy of PP10/11 forms, a copy of data submissions to BPF Energy/Supplier invoices Production records plus any correspondence related to the UnA.
•    To notify BPF Energy of any changes that affects the detail of the application and the UnA within 20 working days.  This includes any change to the responsible person.
•    Co-operate with any person appointed to undertake an audit of the UnA or CCL relief claims.
•    Prompt payment of your BPF Energy Partner Fees and EA Fees.
•    Prompt response to requests for data by BPF Energy.
•    You are committed to work towards your energy effiency improvement target and keep a record of your actions

Our obligations:

•    Ongoing advice on any scheme changes or updates.
•    To collect and summarise your data and to provide this to EA as per the terms of the Target Periods.
•    To use your data supplied to advise you of your forecasted position in regards to reaching your targets.
•    To renegotiate any changes to the scheme and targets.
•    General helpline support for the duration of the scheme.

Maintaining an evidence pack

An evidence pack is a vital part of your CCA and a requirement of the scheme. From the point of application and throughout the duration of your involvement in the scheme an evidence pack should be maintained and added to.

As a minimum your evidence pack should include:

• FEF/PP4 Application and all supporting documents including the base year energy invoices and production records.
• Detail of any audits and where necessary follow-up actions.
• Underlying Agreement (UnA).
• Written evidence of error checking procedures.
• An annual eligibility assessment of the 70% rule and any additonal 3/7ths of energy associated with the eligible facility
• CCA Data Returns and evidence to support the submission (energy invoices and production records).
• Copy PP10/11 forms that have been submitted to HMRC and your supplier.
• Evidence of any carbon buyout payments
• Communication records relating to and in support of your CCA.
• Information on action taken during the Target Period to improve energy efficiency or reduce carbon emissions

Timeframe for reporting

Timeframe for reporting document

At the end of the target period, energy consumption and throughput data must be formally reported to the Environment Agency, via the BPF. In order to make the reporting of data as easy as possible, the BPF has developed an online portal to reduce the administration burden of the scheme. 

The online reporting portal allows a facility to enter energy and throughput data on a monthly basis, to show a current and forecasted position against target for the Target Period. 

The online reporting portal for the CCA may be found here
 
A target unit who meets or over achieves against their target will automatically be re-certified for the next certification period. Over achievement is converted into carbon dioxide equivalent (CO₂e) which is banked on the register for future use by that target unit, known as CO₂e surplus.
 
A target unit that does not achieve target will face a buy-out fee to account for the shortfall between actual and target performance (CO₂e tonne). The buy-out fee is set at £12/tonne of CO₂e for Target Period 1 and 2, rising to £14/tonne for Target Period 3 and 4, and £18/tonne for Target Period 5, this is payable to a consolidated fund administered by Her Majesty's Treasury (HMT). Target Period 6 has seen an increase in the buy-out cost to £25/tonne. Payment of the fee as specified will allow for the target unit to be re-certified for the next certification period allowing for a reduced rate CCL charge. 

Target Period 6 (1 January 2024 - 31 December 2024) - PIFA CCA data submissions must be made via the online reporting portal by 7 March 2025. The Environment Agency deadline is the 1st May 2025 with buy-out payments due by 1st July 2025. 

New to Target Period 6 is a requirement to report on the action taken during the target period to improve energy efficiency or reduce carbon emissions.

Audits

The Environment Agency carry out audits to verify the eligibility and performance of the selected facilities. HMRC do also conduct separate independent audits to verify the CCL relief claim.

Facilities are selected for audit on a risk based selection (for example where the eligible process is complex or the 70% position has chnaged) and by random selection.The audit itself may be a desk top audit over the telephone or involve a visit to site. In both cases information is usually requested in advance that may be available to you from a well maintained evidence pack. 

A report will follow the audit, with two outcomes. Pass, with no further actions or follow up actions/recommendations required to ensure or reduce further risks of non-compliance.

Where there are recommendations and follow up actions there will be an agreed date for these to be completed. Where no action is taken to follow up within the agreed timeframe, the response may be a penalty or in the worst case, termination from the scheme due to non-compliance.

What to do if you change to a new energy supplier

Please remember that whenever you change to a new energy supplier you need to resubmit a PP10 and a PP11 to continue to receive the CCL exemption.  The PP10 is to go to HMRC and the PP11 to your new supplier.  Please carefully read the notes on the form and if you have any problems completing these forms please remember the helpline is there for you on 020 7457 5026 / 020 7457 5027 

Find the PP10 form here

Find the PP11 form here

 

Government guidance on CCA and the wider policy landscape

The CCA scheme operates within a broader set of existing policies which are part of the UK Government's strategy for business energy efficiency and industrial decarbonisation. Other policies in this space include:

CCA Guidance and Operations Manual

How climate change agreements (CCAs) work, who is eligible and which sector associations hold a CCA can be found in the link here

Combined Heat and Power Quality Assurance

Certification for good quality CHP and CHPQA financial incentives, further information can be found in the link here 

Energy Intensive Industries (EIIS)

The Government allows energy intensive industries to claim an exemption on the renewable energy costs (Contracts for Difference, Renewables Obligation and Small-Scale Feed-in-Tariff) that are levied on electricity bills. To apply for exemption the business must manufacture in the UK within an eligible sector defined by NACE code and pass a 20% electricity intensity test. Further information including how to apply may be found in the link here

Energy Savings Opportunity Scheme (ESOS)

ESOS is a mandatory energy assessment scheme for large UK undertakings and their corporate groups. Organisations that qualify must carry out ESOS assessments every 4 years, this is an audit of the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures. Further information on the qualification criteria and ESOS compliance may be found in the link here

Industial Energy Transformation Fund (IETF)

The IEFT is designed to help businesses with high energy use, such as energy intensive industries, to cut their energy bills and carbon emissions through investing in energy efficiency and low carbon technologies. The UK government announced £315m of funding in the 2018 budget, available up until 2024 this will be managed over 2 phases: phase 1 was open to applications from 20 July to 28 October 2020, phase 2 will launch in 2021. Further information on the scheme eligibility and funding may be found in the link here

Streamlined Energy and Carbon Reporting (SECR)

SECR regulations require large businesses to annually report on their energy and carbon emissions and report on any efficiency measures they are taking to show continual annual improvements. All quoted companies in the UK need to comply if the meet any two of the determining factors that qualify them as large; more than 250 employees, an annual turnover of more than £36m or an annual balance sheet of over £18m. Further information and guidance on SECR including greenhouse gas (GHG) reporting may be found in the link here 

UK Emissions Trading Scheme

The UK ETS applies to energy intensive industries, the power generation sector and aviation. Further details on who it applies to and how it works can be found in the link here

Carbon Price Support

If you own electricity generating stations or you are an operator of a combined heat and power station (CHP), you pay Carbon Price Support rates. Further details on this may be found in the link here

The British Plastics Federation has launched a Carbon Footprint Tool which follows GHG protocol guidance using the three scopes necessary to help you measure and report the total greenhouse gas emissions caused by your organisation. 

Participants of the Plastic sector Climate Change Agreement schemes are provided with access to the tool FREE of charge. To get started please register your organisation via the CCA Reporting Website, this is to allow for the transfer of the energy data already submitted as part of your Climate Change Agreement.

Once you access the CCA reporting website there will be a new Carbon Footprint tab available that will take you through the registration process. To register your interest or for further information please contact [email protected]

A link to the Carbon Footprint Tool may be found here

 

Government Consultations

BPF/BPF Energy will undertake any renegotiations of the Plastics Sector Climate Change Agreements, actively lobbying the government on behalf of the CCA Participants. 

Climate Change Agreements: consultation on a new Six-Year scheme

Closed: 14 February 2024

In the Autumn statement on 22 November 2023 the government announced a new six year Climate Change Agreement scheme (2025-2030) split into three target periods, allowing for a continuation in the reduced CCL charge for eligible participants between 1 July 2027 and 31 March 2033. Reduced rates from the current CCA scheme will be extended from 31 March 2027 to 30 June 2027.

The new scheme will also be open to new entrants in existing sectors, who will be able to apply from 1 May 2024. 

Following this announcement, the Government have also opened a consultation to seek views on the details for this new CCA scheme.  

Some key points from the consultation:

• Existing participants will not be automatically transferred to a new scheme, there will be an assessment to ensure that they meet existing eligibility criteria 
• Sectors may make a proposal for a new sector/processes to be added
• New entrants may apply at any time however the proposal states that new entrants who join partway through a target period will be required to complete one Target Period before being certified for CCL relief
• Annual confirmation on the 70:30 eligibility rule for all facilities to ensure compliance with the threshold
• The use of facility level data to inform target setting
• A proposal that the base line year should be updated from 2018 to 2022
• A move to facility level data reporting, removing the option for an operator to form a multi-facility bubble target unit
• To introduce a requirement for annual interim reporting to provide an estimate of the performance outcome at the end of the Target Period
• A requirement to provide an annual report of the actions taken and the plan to improve your energy efficiency and reduce your carbon emissions during your participation in the scheme. 
• All facilities reporting under a Novem type target mechanism with fixed (non-production) and variable (production) energy consumption values.  

The consultation can be found in the link here. 

CCA Consultation: proposals for a future scheme

Consultation response: November 2023

In December 2021 the Government published an initial consultation setting out key aspects of a potential future scheme and the reforms under consideration, the response to this consultation was may be viewed in the link here

On 15 March 2023 the government announced their intention to extend the CCA scheme for a further two years and to reopen the scheme to new entrant applications between May and September 2023.

In November 2023 the government published their response to the consultation on the extension to the CCA scheme, this included a new Target Period 6 and reduced rates of CCL to 31 March 2027 along with further proposals on a future scheme which was then announced in the Chancellor's Autumn 2023 statement. 

Climate Change Agreements scheme extension and reforms for any future scheme

Consultation response: July 2020

In the spring 2020 budget speech the chancellor announced a two year extension to the CCA scheme and the reopening to the scheme to new entrants. The extension to the CCA:

• reopens the scheme to new entrant applications with a closing date of 30 November 2020
• adds a further Target Period 5 to run from January 2021 to December 2022
• extends Climate Change Levy relief for eligible CCA participants to 31 March 2025
• amends the buy-out and penalty fees that apply to TP5 to £18/tCO2e
• prevents the use of previously gained Carbon surplus to offset under-performance against TP5 targets
• amends the base year to 2018 for TP5

For the full outcome of the consultation please visit the link here

Reforming the business energy efficiency tax landscape

Consultation response: March 2016

This consultation response highlights the requirement for simplified energy and carbon reporting framework for introduction by April 2019. In brief the consultation proposes:

• the integration of the existing compliance and reporting requirements of CCA's, EU Emission Trading System and ESOS with any new reporting framework, to further minimise administrative burdens
• mandatory annual reporting for the organisations within its scope, with board or senior level sign-off and some public disclosure of data
• applying the new reporting framework to all large UK undertakings who satisfy the qualification criteria for the ESOS scheme (or similar), as well as large public and third sector organisations which meet these criteria
• protecting the smallest or lowest energy-consuming businesses within the smaller businesses who do not pay CCL remaining fully protected from future CCL increases. CCL paying businesses will have three years to make energy savings before CCL increases will take effect, with RPI increased from 2016. 

For the full outcome of the consultation please visit the link here

 

CCA Helpline Tel: 020 7457 5026 / 020 7457 5027  Email: [email protected]